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Series of legal changes required to implement USMCA

THE Office of the United States Trade Representative has submitted a list of changes to existing laws required to bring the US into compliance with the US-Mexico-Canada Agreement (USMCA) - an obligation set by Trade Promotion Authority (TPA) legislation that must be completed before the Trump administration submits to Congress any USMCA implementation bill

Series of legal changes required to implement USMCA

THE Office of the United States Trade Representative has submitted a list of changes to existing laws required to bring the US into compliance with the US-Mexico-Canada Agreement (USMCA) - an obligation set by Trade Promotion Authority (TPA) legislation that must be completed before the Trump administration submits to Congress any USMCA implementation bill

12 February 2019 - 19:00

THE Office of the United States Trade Representative has submitted a list of changes to existing laws required to bring the US into compliance with the US-Mexico-Canada Agreement (USMCA) - an obligation set by Trade Promotion Authority (TPA) legislation that must be completed before the Trump administration submits to Congress any USMCA implementation bill.

Among the legal changes required to implement USMCA is a waiver of the merchandise processing fee (MPF) on textile and apparel goods imported into any party under a tariff preference level (TPL), as well as giving importers the ability to make certifications of origin.



USMCA provides preferential tariff treatment for certain textile and apparel goods not originating in North America, up to quantity thresholds outlined in the TPLs.



For example, the agreement provides for the US to annually import 40 million square metres equivalent (SME) cotton or manmade fibre from Canada, and 45 million SME cotton or manmade fibre from Mexico, tariff-free.



USMCA continued the MPF waiver on originating goods, but the Consolidated Omnibus Reconciliation Act of 1985 would need to be amended to provide for a new MPF waiver on TPL goods.



In addition to waiving the MPF on TPL goods, USMCA would allow importers to certify North American origin to receive tariff preferences, whereas NAFTA generally requires that exporters file documentation to validate production location for tariff treatment purposes.



Implementing the new provision would require changes to the Tariff Act of 1930, as amended, to allow importers at least one year from the date of importation to claim preferential tariff treatment under the USMCA and to exempt importers from penalties for an invalid origination claim as long as the importer voluntarily corrects the claim and pays and customs duty owed upon becoming aware of the issue and before the government's discovery of the error.



Other required changes to the Tariff Act include an imposition of penalties on US producers and exporters making false origination certifications, as well as a requirement for anyone issuing certifications to keep copies of such certifications and supporting documents for at least five years and to provide them to customs officials upon request.



Further, USMCA implementing legislation must provide for specific verification procedures for textiles and apparel trade and actions to address textile-related customs offenses, as well as changes requiring inputs such as sewing thread, pocketing, narrow elastic bands and coated fabric be made in North America, according to the Office of the US Trade Representative's description of necessary legal changes, reports American Shipper.



The list of changes also includes amendments to US laws governing rules of origin for autos, which is significantly different from NAFTA, including a requirement that North American-built autos include significant content in plants with wages averaging at least US$16 an hour - effectively in the United States or Canada.


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